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Ask a Margins Expert

RSS By: Chris Barron

Chris BarronHave a margins question? Through this blog, you will gain insight into improving your bottom line, as a margins expert answers questions and provides farm business advice.


Spring Invoice Review

May 21, 2011


Spring is always a sprint to the finish line. Fast-paced action, long hours, and very little sleep can lead to overlooking some important margin management processes. As things begin to slow down to a more normal pace it's time to review your invoices for your spring inputs. While things are relatively fresh in your mind; invest some time and effort into a line by line review of each specific invoice for your operation.
It's amazing what can be overlooked when everyone is operating in high gear. We are all human, including our suppliers. When workloads are double or triple and invoicing is part of the equation there are bound to be some mistakes along the way. Therefore, it's worth some extra effort to review invoices line by line. If you don't completely understand some of the individual information on an invoice, call the supplier for a detailed explanation. Suppliers value your business and want clearly understood and concise billing; however, even some of the best systems can create questions that need to be discussed. Questioning an invoice is just another important part of managing your business. It also tends to demonstrate to yourself and your suppliers that you are a detailed business manager. Make regular invoice reviews a general procedure of your business.
Here is a list of key analysis topics for spring invoice reviews.
  1. Seed - breakdown costs of individual crops if multiple crops are on a single invoice.
  2. Fertilizer - analyze rates and compare differences from farm to farm
  3. Nitrogen- analyze rates, be sure that rates and costs per acre match price per ton prices
  4. Equipment repairs - review all labor and parts provided by service technicians
  5. Warranty coverage- versus your charges
  6. Parts-what did you use versus what you were billed
  7. Supplies-what did you use versus what you were billed
  8. Labor - review hourly wages or other labor structures
  9. Fuel -try to manage your beginning and ending inventory, this makes it fairly easy to track usage.
Keep in mind, now is a good time to break down these costs into per acre and per bushel expenses. This will help you as you analyze your overall cost of production.
A detailed invoice review which includes a discussion with suppliers serves two purposes. First, it may help you catch an overcharge, an application mistake, or an incorrect product for a specific line item. The second and possibly more important purpose is the peace of mind that your expenses are accurate.
Managing margins effectively includes many facets of your business. Keep in mind, 50% of the equation starts with your expenses. You may as well start out with correct information.
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